Firm AAA's earnings and dividends are expected to grow by a rate of 0.02 a year. This growth will stop after year 4. In year 5 and later, it will pay out all earnings as dividends. Assume next year's dividend is 7, the cost of capital is 0.1, and next year's EPS is 15. What is AAA's stock price today? Round your answer to 2 decimal places.
Firm AAA's earnings and dividends are expected to grow by a rate of 0.02 a year. This growth will stop after year 4. In year 5 and later, it will pay out all earnings as dividends. Assume next year's dividend is 7, the cost of capital is 0.1, and next year's EPS is 15. What is AAA's stock price today? Round your answer to 2 decimal places.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 18MC
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